5 Smart Tips to Increase Home Loan Eligibility Quickly
The easy availability of Home Loans these days has increased home affordability among people. So, while planning to buy a dream house, an individual would want to get the maximum loan amount possible. However, first-time home buyers must do some research and prepare for the Housing Loan eligibility needs.
Loan eligibility is the primary reference point most lending institutions use to assess a loan application. They conduct a detailed analysis of an applicant’s eligibility based on elements like the loan term, credit rating, income, repayment capacity, financial obligations, etc. However, loan seekers can use a Home Loan eligibility calculator online to estimate their eligible loan amount and find ways to boost their eligibility quickly. Below are a few ways to enhance Home Loan eligibility and find the way to own a dream house without hassle.
1. Enhance the Credit Score
A high credit score indicates an individual’s seriousness for debt settlement, based on which lending institutions determine their creditworthiness. A credit score above 700 boosts Home Loan eligibility. However, achieving that requires timely repayments, a diverse credit profile, a low credit utilization ratio, minimal financial obligations, and a clean credit history.
When they receive a Home Loan application, lending institutions check the credit score to evaluate credibility. A credit score above 750 brings quicker loan approval at lower interest rates and other favourable terms.
2. Apply for a Joint Home Loan
Families with multiple earning members can consider applying for joint Home Loans to increase their loan eligibility. The best co-applicants would be the spouse or a parent. Apart from boosting eligibility, co-applying also divides the repayment burden and doubles the applicable tax benefits. Besides, co-borrowing with a high credit rating increases loan affordability, making repayment more manageable and faster for the borrowers.
3. Reduce Debt Obligations
An individual’s debt-to-income ratio is a critical factor lending institutions check to determine eligibility. Therefore, before applying for an online housing loan, try clearing all financial obligations, as it will positively impact Home Loan eligibility. Additionally, reducing the DTI ratio will boost the credit score, further enhancing loan eligibility. Most lending institutions expect a DTI ratio of 50% or less to approve loan applications. So, keeping it within that limit increases the chances of getting a bigger loan.
4. Declare a Higher Income
Declaring a higher income by including all additional income sources significantly increases Home Loan eligibility. While filling out the online housing loan application form, don’t forget to add all income sources besides regular salary, including rental income, part-time jobs or businesses, earnings from hobbies, etc. It boosts the applicant’s financial health and helps secure a bigger loan amount. Extra income also reduces the DTI ratio, underlining a higher repayment capability.
5. Opt for a Longer Loan Tenure
Many borrowers opt for a shorter loan term to pay off their loan sooner and remove the lien. However, it is not an astute move for an applicant’s eligibility. A shorter loan tenure increases the monthly EMI amount, causing the loan provider to think twice before taking the associated risk. Opting for a longer term reduces the EMI amount, assuring the lender of timely payments. Use a Home Loan eligibility calculator online to select a suitable loan term and apply accordingly.
Although a longer loan tenure increases the total interest outgo, the additional funds available are worth the extra cost. Even after choosing a longer term, the applicant may consider pre-paying the loan whenever possible. They will pay the applicable prepayment charges but save on the interest cost.
Using these tips will improve the chances of getting a bigger loan amount. Start with paying off the outstanding balances and improving your credit score to reduce risk and boost repayment capacity. Use a Home Loan eligibility calculator online to calculate eligibility based on the property’s cost, income, and FOIR, and know how much you are eligible to borrow.
Most lending institutions have in-house models and policies for home loans. Check different eligibility conditions, documentation requirements, interest rates, and other regulations. Compare them and opt for one that best suits your eligibility.